Illinois Mega Millions winner could face "lottery curse"

April 17, 2012|Andrew Stern | Reuters

CHICAGO (Reuters) - When the winner of a third of the record $656 million Mega Millions lottery jackpot steps before the cameras on Wednesday at a news conference in Red Bud, Illinois, life will be upended and there is a high risk he or she will fall prey to the "lottery curse," experts said.

Illinois requires the winner's identity to be revealed. Holders of two other winning tickets in Kansas and Maryland have chosen to remain anonymous.

"It's the lottery curse: you hear about people who win these huge lotteries and end up broke a few years later," said Richard Lustig, who writes about improving one's chances of winning.

"They're bombarded by media people for interviews. They're preyed on by people looking for money. The winner should decide whether they want to be in the spotlight or not," Lustig said.

The purpose of identifying winners, lottery operators say, is to persuade the public that the lottery is run fairly and anyone can win. Also, a beaming winner is a marketer's dream that can boost lottery sales.

The Mega Millions prize the Illinois winner will claim is worth roughly $158 million in a lump sum before taxes, or $218.6 million parceled out in 26 yearly installments.

The lottery presentation on Wednesday at Red Bud's village hall may be the biggest news event ever in the tiny farming community southeast of St. Louis, Missouri.

Tony Biscardi of Thunder Bay, Ontario, who won a lottery in Canada earlier this month, has some advice for the winner. He can understand the hesitation about coming forward and wishes he could have remained anonymous, but Canada's rules require disclosure of winners.

"It's actually quite hectic," the former construction superintendent said of winning a $1.1 million prize. "I wished we could have had more to say on who we told. We didn't even have the check in hand and people back home were sending us messages and texts."

INUNDATED WITH REQUESTS

Biscardi knows another Thunder Bay winner, a couple who recently won a $50 million lottery, and said it has been inundated with requests for financial help.

"People are calling them from all over, trying to recite their hard-luck story and get some money," Biscardi said.

Many lottery winners end up losing everything, experts said.

Stories abound of people like West Virginia businessman Jack Whittaker, Jr., who won a $315 million jackpot in 2002 only to experience a series of thefts, gambling losses and lawsuits.

Lustig's advice to jackpot winners is to hire advisers and resist the urge to go on a spending spree. "Take care of business first ... then go out and buy the talking car."

Lottery winners are increasingly hiring lawyers and financial advisers like Don McNay, of Richmond, Kentucky. None of the more than 10 lottery winners he has advised have gone broke, said McNay, who wrote a book of advice for lottery winners.

"If you can keep anonymous, stay anonymous," he said.

Some winners form trusts or corporations to collect the bounty. McNay said he tried to track down a $161 million Ohio winner but never got beyond the name of the bank that collected the prize for the "XYZ trust fund."

"In Florida, you have to stand up to do the big thing with the check, which is asking for trouble to suddenly tell the world that you've got millions of dollars that you never planned on having and don't have the systems in place to deal with it," McNay said.

He cited a Florida study that looked at bankruptcies and a Stanford University study on lottery winners. Both concluded that roughly nine out of 10 big prize winners lost their windfall within five years.

Nearly three quarters of inheritances are frittered away, and roughly three-out-of-five professional football players go broke within a few years of retiring, he said.

The man who runs the Illinois lottery, superintendent Michael Jones, said he is sympathetic to the winners' plight. But winners must have a good reason to remain anonymous.

Lottery operators want to make sure there is no hint of cheating, Jones said, as frequently happened with tainted private lotteries in the late 19th Century that sometimes failed to award prizes or arranged for cronies to win.

The last lottery cheating scandal, in 1980, was dubbed the "Triple Six Fix" in Pennsylvania, where insiders substituted weighted balls to have the daily number come up 666. The scam was discovered by tracking down conspirators who bought tickets.